Business as a force for good: New paradigms, new realities

More than ever before, there seems to be a growing consensus that in order to survive and be successful on a long-term basis, businesses need to adopt sustainable practices.

Globally, business leaders are increasingly moving away from the conventional business models to ensure that their companies prosper by responding to a wide array of challenges the world currently faces. This in turn offers us reason to be optimistic about the future of sustainable development. Business leaders are rethinking older models and innovating to provide an entirely fresh perspective of doing business that benefits not only companies, but also society at large, leading to a positive impact on the triple bottom line: people, planet, and profit. Globalisation has contributed to the increased gap between the rich and the poor, and in order to address this issue, businesses should be guided by both commercial and social interests. By implementing new creative ideas aligned with sustainability, to include upgraded technology that can transform the product rather than throwing away old materials, businesses can earn competitive advantage, leading to a reduction in costs and increased profits. In such scenarios, where the markets are aligned with the requirements of sustainable development, and sustainability is rewarded and incentivised, a direct impact can clearly be witnessed in the progress of economies.

The Emergence of New Business Models

Fast-changing markets are turning the traditional business model on its head. This shift is largely attributed to greater awareness of the economic costs of environmental degradation and rising oil and food costs. This is driving businesses around the world to react to consumers and shareholders who are becoming more informed and more vocal in insisting upon corporate sustainability. Companies can no longer justify a wasteful business model with a temporarily strong financial bottom line, thus making business operations with environmental, social, and fiscal accountability the measurement of market success, rather than the exception. Companies now recognise the need to rebuild public trust and maintain bridges between business and society, and are thinking in terms of longer-term impact that business has on the environment, society, and the economy. The companies are therefore moving beyond their factory gates and the marketplace, and are also working towards responsible and ethical practices. This not only provides good returns for shareholders and consumers, and a safe and satisfying workplace for employees, but also an equally advantageous proposition to the community at large, thus strategically acting as a ‘Force for Good’.

According to the Brundtland Report published in 1987, sustainable development is defined as:

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts:

The concept of needs, in particular the essential needs of the world’s poor, to which overriding priority should be given; and

The idea of limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs.

India’s Movement Towards Sustainable Development

Sustainable development in India includes a variety of schemes within social, environmental (clean energy, clean water, and sustainable agriculture), and human resources segments, having attracted the attention of both central and state governments, as well as the private sector. Green energy, fuel alternatives, development schemes for families below the poverty line (BPL), and other social sector initiatives have been touted as receiving heavy investment in India over past few years, despite the economic slowdown.

At the release of a report on green accounting in April 2013, then Indian Prime Minister Manmohan Singh asserted that in India “a number of national strategies and policies, which inculcate the principle of sustainability, are already in place”. He also gave examples of the National Clean Energy Fund and the Compensatory Afforestation Fund.

India’s movement towards sustainable development began in 1972 at the UN Conference on Human Environment at Stockholm, when former Prime Minister of India, Indira Gandhi, emphasised that the removal of poverty is an integral part of an environmental strategy for the world. In her address, Indira Gandhi highlighted the concept of inter-relatedness and inter-linked responsibilities of environmental protection and human development. However, it was not until the 1990s that this agenda was adopted within the policy corridors of India.

As of late though, the corporate sector in India has heeded the call of time, and leading players have started to initiate measures designed to address sustainable development. Realising its importance, Indian companies are taking into account the environmental impact of their businesses when making decisions. Indian companies are shifting away from operations aimed entirely on profit-driven motives, to processes that integrate social and environmental issues, as they strive to achieve long-term sustainability. Business chambers have also joined forces in encouraging its members to undertake sustainable development practices, creating and supporting an environment conducive to the growth of industry in India.

Up until the early 1990s, India was virtually a closed economy with the industrial sector subjected to controls and regulatory mechanisms. With export pessimism underlying the country’s policy approach, India largely focused on import substitution, quantitative controls, and administrative exchange rates right from the beginning. The economic reforms during 1990s aimed at enhancing the competitiveness of Indian industry by opening up the economy to the international markets. This phase was marked by a movement of Multinational Companies (MNCs) into India and the subsequent opposition of environmental groups who viewed sustainability through a solely environmental lens.

Economic Reform for Development

The beginning of these economic reforms occurred during a time when countries around the world acknowledged and started addressing increasing environmental concerns, such as at the Earth Summit in Rio in 1992, which led to the UN Framework Convention on Climate Change and Agenda 21. (Agenda 21 is the most comprehensive outline of necessary actions for sustainable development at local, national, and international levels.)

It was also during this phase that India embraced the UNDP concept of ‘Human Development’, introduced in 1990, which shifted the focus away from national income as the sole indicator of development to include the choices that citizens make in their everyday lives. This shift was due to the understanding within the Indian government that it is imperative to eradicate extreme poverty and hunger, but that promotion of a green economy is of equal importance for sustainable growth and quality of life. India also started receiving funding, especially from international financial institutions such as World Bank for projects to mitigate environmental damage and address environmental issues based on country assistance strategies. In moving forward, the government of India published its major environmental document, the National Environmental Action Plan (NEAP) in 1993, which identified addressing the pollution of air and water resources as a main priority, as well as land degradation that threatened the health and prosperity of the population. However, implementation of the plan was lagging. In 1993, the Ministry of Environment and Forests introduced the first non-fiscal reporting for companies under the Air, Environment, Waste and Water Act, which aimed to prevent and control the pollution of natural resources.

Millennium Development Goals and the UNGC

In 2000, two major events at the global level brought about a significant change in the development discourse across the world. It was during this year that the UN launched the Millennium Development Goals (MDGs)and the United Nations Global Compact. On one hand, the eight MDGs set objectives for achieving progress in 1) the elimination of poverty and hunger; 2) achieving universal primary education; 3) promoting gender equality and empowering women; 4) reducing child mortality rates; 5) improving maternal health; 6) combating HIV/AIDS, malaria, and other diseases; 7) ensuring environmental sustainability; and 8) developing a global partnership for development.

On the other hand, the United Nations Global Compact (UNGC) was launched to bring together and call upon the corporate sector to innovatively address development issues as part of their business strategies. Launched by the then UN Secretary General Kofi Anan, the UNGC aimed to conjoin private sector activities with civil society initiatives, and establish inclusive corporate sustainability in the global economy by acting as a leadership platform with a global dimension. The UNGC primarily operates in four realms: 1) Human Rights; 2) Labour; 3) Environment; and 4) Anti-Corruption. These areas are further dispersed into ten universally accepted principles adopted by diverse signatories across the world, as value-based approaches in achieving sustainable development. The UNGC has transformed itself into the largest corporate citizenship body in the world, promoting the adoption of sustainability practices worldwide. Its representation on the high-level panel of the Secretary General on the post-2015 global development agenda is a direct result of the UNGC’s increasing role in setting the sustainability agenda for companies worldwide.

India’s progress on the MDGs and across the various indicators has been a mixed since 2000. India has already achieved the target of reducing poverty by fifty percent. Regarding education, the country achieved gender parity in primary school enrolment, and achieved parity in secondary and tertiary education. India is also set to reduce hunger by half and decrease maternal mortality rates. The country has successfully managed to control the spread of deadly diseases such as HIV/AIDS, malaria, and tuberculosis. It has also increased forest cover and halved the proportion of people without access to clean drinking water. Performance on other indicators though, has been far from satisfactory. India continues to lag behind on targets for empowering women through wage employment and political participation, reducing child and infant mortality, and improving access to adequate sanitation. Reports also suggest that progress on achieving MDGs is mixed across the various Indian states, with wealthier areas faring better on the MDG performance index.

Over the years the role of businesses within the development discourse has grown and contributed immensely to providing much needed efficiency, skills, and financial support to both civil society and governments. Thus, resources are better used to improve the conditions for human potential to flourish and lead to more inclusive and sustainable growth. Much of this has been led by initiatives at the national level, and businesses have played a significant part in providing necessary financial resources.

SDGs Looking Forward

With the new Sustainable Development Goals (SDGs) announced by the UN in 2015, and their ratification by the 193 member states, the bar for signatory nations is set even higher compared to the MDGs. Over the next 13 years, until 2030, the world needs to move in a direction that achieves universal development gains, covering the areas and issues that firmly put the world on an inclusive development matrix with people at the centre of economic growth.

Going forward, a sustainable development agenda is needed to both expedite and promote the importance of realising the social, economic, and environmental well-being of people not only in developing nations, but also in relatively advanced nations, given the uncertain political atmosphere the world is currently facing.

Pooran Chandra Pandey is one of India’s leading experts on advocacy, economic and social development work, management and the voluntary sector. From 2011 to 2016, he served as Executive Director for UN Global Compact Network India. Prior to taking up that post, he was Director at the Times Foundation, one of India’s leading corporate foundations working in the areas of health, education, environment, women’s empowerment, and disaster management. From 2004 to 2007, he was CEO at Voluntary Action Network India, the country’s largest association of voluntary organizations, comprising 2,400 members within India.
Credited with pioneering the notion of involving civil society, businesses and government through a consensus-building approach for inclusive social dividends, Pooran Chandra Pandey has led the launch of national public service campaigns within India such as Lead India, Teach India and the social impact awards.
Specialising both in development and humanitarian assistance, he has also chaired and co-chaired a number of Indian Government task forces and committees developing national policy on the voluntary sector, implementing the UN Handbook, non-governmental charter of good governance, rationalisation of policies for NGOs, and the foreign contribution regulation act.
Pooran Chandra Pandey holds a BA and MA from the University of Allahabad, an M.Phil in International Studies from Jawaharlal Nehru University in Delhi, and was also a Chevening Scholar in Leadership and Global Organization at the London School of Economics.